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‘How can
I soar like an eagle if I continue working with a bunch
of turkeys?”
That’s a
“fowl” remark you might expect from an impatient,
testosterone-driven chief executive officer (CEO) who’s
blowing his top over unattained corporate conquests or
bottom-line goals.
But
Finance Secretary Margarito “Gary” B. Teves is hardly
this type of CEO. On the contrary, he has a reputation
for being calm and collected at all times even as he
mercilessly raises the bars to be hurdled by
subordinates. I have yet to hear anybody say otherwise.
He seems unflappable even in extremely frustrating
situations when ordinary executives would be beside
themselves with rage and hurling all sorts of things at
their underlings, including insults, invectives,
half-consumed cigars, staplers or cell phones—if not
their walking papers.
Given by
President Gloria Macapagal-Arroyo the sensitive mandate
to put sense in and direction to the government’s fiscal
affairs, and the task to balance the budget for 2008,
one can imagine the extreme frustration he must be
harboring in his chest in the face of the huge
revenue-collection shortfalls of the Bureau of Internal
Revenue (BIR) and the Bureau of Customs (BOC). The
revenue shortfalls are public knowledge, having been
copiously written about in business news pages.
Appearing unperturbed by the laggardly performance of
the BIR and BOC (as if he had expected it all along),
Teves had segued his revenue-raising program to the
privatization mode, which has since raised for the
government a total of roughly P90 billion from the sale
of its shares in the Philippine Long Distance Telephone
Co., its assets in PNOC-EDC and a smattering of other
smaller government assets.
At the
same time, however, without once losing his cool, Teves
has prodded both the BIR and the BOC to catch up on
their collection targets for the fourth quarter, for
their own sake. Teves knows that the lateral attrition
law, which rewards overperformance and penalizes
nonachievers in these agencies, is sufficient to
motivate both agencies to do better in the fourth
quarter. Already, while the fourth-quarter figures are
obviously not yet in, both agencies are boasting about
their last-ditch efforts. It seems there’s a very good
chance that the collection deficits to be posted by both
agencies for the entire year will, after all, be
significantly reduced.
Lately,
however, another potential headache or “underachiever”
under the Department of Finance has come to the fore.
The disappointing financial performance of the
Philippine Export-Import Credit Agency (Philexim) came
under public scrutiny when this government corporation’s
own audit committee, which happens to be headed by
Augusto B. Santos as chairman, came up with a very
negative report on Philexim’s financial performance as
of September 30, 2007.
Virgilio
R. Angelo, president and CEO, heads Philexim. He used to
be director of a couple of government banks (Philippine
National Bank, Philippine Postal Savings Bank), and
president of the BPI Securities Corp. But he is more
remembered as a former general manager and vice chairman
of the Philippine Charity Sweepstakes Office and former
administrator of the Overseas Workers Welfare
Administration.
Santos,
who is now director general of the National Economic and
Development Authority, told the Philexim board (which is
headed by Teves as chairman) “it is difficult to
understand why Philexim is going through a very tough
year when, in fact, the economy is doing good.” He added
that “much remains to be done and stronger measures
should be put in place to arrest a further deterioration
in the financial status of the corporation.”
Santos,
in the first paragraph of his report, also said “the
audit committee is very much concerned about the current
financial state of Philexim.”
Highlights of Philexim audit committee’s report are the
following:
1.
Actual revenues for the first three quarters amounted to
only P141 million against a target of P194 million, or a
revenue shortfall of P53 million. This level of actual
revenues is behind the 2006 level by P76 million, or 35
percent lower.
2.
Management presented a catch-up plan for the October to
December 2007 period, which shows a projected core
business revenue of P137 million for the last three
months of the year (P10 million for small and medium
enterprises or SMEs and P127 million for large
accounts). However, this catch-up plan for the last
quarter is even higher than the actual core business
revenue realized in the past nine months of only P93
million, which is seen as “very optimistic.” Based on
the level achieved in the past nine months, only around
P31 million seems attainable for the remaining three
months of the year.
3. Even
assuming that the catch-up plan is achieved, total core
business revenue for the year would amount to only P230
million, which still falls short of target by P87
million, thus making the revenue catch-up plan
insufficient, unrealistic as it is.
4.
Expenses have likewise been below budget by P66 million
primarily because of the nonhiring of additional
personnel in critical units (only 10 out of a projected
26 new employees were hired). In the very critical unit
of the large-accounts sector, three account officers
were hired but three also resigned, thus, no incremental
manpower at all. Also, there were no promotions effected
despite a significant amount budgeted for the purpose.
These alleged “savings” in expenses are unwarranted.
(Here,
Santos seems to be implying that Angelo’s management
style is being penny-wise but pound-foolish. Human
resources are any corporation’s prime resource.)
5. Of
the P11 million budgeted for business promotion and
development, only P3.6 million was used, which is less
than the amount spent in 2006.
6. As of
September 30, 2007, Philexim had a net loss of P14
million, the first time in 12 years. Although this is
lower than the projected net loss of P20.8 million, it
is 130 percent behind the net income realized in the
same period last year. Last year, Philexim had a net
income of P47 million as of September 30 despite the
payment of retirement gratuity amounting to P18 million.
Insiders
say the Philexim board is getting increasingly
dissatisfied with the way Angelo has been running
Philexim. Although his academic credentials seem
sufficient (BSBA economics, magna cum laude, University
of the East; MBA, Ateneo de Manila University), the
downturn in Philexim’s performance has somehow dulled
the gloss of his professional record.
There’s
a world of difference in running a serious corporation
with a macroeconomic mandate like Philexim when you
compare it with, say, the PCSO, one insider said. “At
the PCSO, the revenues just keep rolling in and the
problem is how to judiciously dispose of the money to
the various charities. Here, the problem is spotting and
building on opportunities in the export sector to
achieve the twin goals of developing that sector while
carefully watching Philexim’s corporate bottom line.”
But
still, Angelo has these to say in his own defense:
On the
revenue shortfall: “Revenue shortfall is a timing issue
to large-ticket accounts sliding in the pipeline
—delaying realized income. Moreover, there is a need to
undertake more prudential due diligence on accounts and
the credit process itself.
“Our
fiscal performance is mainly driven by the business that
we assist through our guarantee financing. It does a
balancing act: if the business becomes strong due to our
program assistance, they will become more financially
self-reliant. We saw large-ticket projects fully
prepaid, after becoming viable due to our assistance.”
On
underspending: “We may have overbudgeted on some
business-promotions activities, but nevertheless our
expenditures were just appropriate for our requirements.
“The
business is catering to a niche market opportunity,
hence, our business promotional activities are more of
target market-specific, thus, not needing the budgeted
figures.”
On the
economy growing: “Philexim counts its developmental
impact as the greater measure of our accomplishment as
an agency. Development-wise, Philexim provided its
critical share to nation-building when it mattered
most.”
Angelo
explains Philexim’s impact was felt by the export sector
through the P8.1 billion in total guarantees it issued
during the period. This, he said, was 21 percent higher
than the previous level of P6.94 billion issued over
three years from 2002 to 2004.
Will
Angelo’s arguments convince the high-powered board that
he’s doing justice to his position?
The
other members of the board at this juncture are Luis S.
Sicat (private- sector member as president of Jelina
Inc. and secretary of Philippine Exporters
Confederation), Rogelio C. Lombos (chairman, Philippine
Overseas Construction Board), Quirino B. Baterna
(private-sector representative and former executive
trustee, Asset Privatization Trust), Genando S. de Leon
(private-sector representative and chairman of LSL
Decohomes Inc.), Amando S. Tetangco (governor and
chairman of the Monetary Board, Bangko Sentral ng
Pilipinas), and Peter B. Favila, trade and industry
secretary.
Omerta_bdc@yahoo.com |
